Monday, November 10, 2014

Bad Economics for a Good Cause

Update: I had the benefit of watching the entire video (51:19 from a plenary session on "The Role of Economics in Shaping the ACA and How Economics Can Inform Inevitable Mid-Course Corrections"), but UPenn decided to remove it so all you can see is this clip from the 20:30 mark in the full video (another update: UPenn put the full video back -- see above): 
Omitted highlights include:
  • Prof. Pauly calls himself "The father of the individual mandate (although not this mandate)"
  • Prof. Pauly prefers the "Rambo" alternative the ACA's individual mandate.  Rambo would put all of the uninsured on a bronze plan without their permission and send them a tax bill for bronze premiums. 
  • Prof. Gruber claims that the Cadillac tax is excessive (effectively over 100 percent due to corporate income tax interactions with the Cadillac tax)
  • Prof. Gruber claims that the individual mandate penalty should be much larger.
  • Both Professors discuss the Oregon study and it's failure to show a statistically significant effect of health insurance on health.  Among other things, Prof. Gruber said that the study results widened his priors without changing their mean.
  • Prof. Gruber wants to expand the subsidies: expand premium subsidies for everybody and cost-sharing subsidies for people under 300% FPL.  He is optimistic that the opportunity for such expansions will come as (if?) healthcare gets more expensive.
  • Prof. Gruber would not oppose eliminating the employer mandate.  The revenue loss would be nontrivial (but not huge), he says, but the mandate is primarily affecting the composition of insurance (employer vs Obamacare) and who really cares about that. [remark: I agree that the employer mandate affects the composition of insurance, which is why the deficit effects of the employer mandate are huge]
  • Neither professor acknowledges the law's work disincentives or its large productivity costs.
  • Both professors are clear that they consider the pre-ACA status quo as the relevant alternative for evaluating the law.  That's good news for me: my book does the same thing.  

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